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| Home > Information > Power of Attorney for Finances |
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| Power of Attorney for Finances |
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A power of attorney (POA) for finances is a document in which one person (the principal) authorizes another person to act as his or her agent, or attorney-in-fact, for only finance-related legal matters. These powers can be broadly or narrowly defined, and often relate to selling real estate or personal property, paying bills and managing investment accounts or business interests. Within the power of attorney, the principal can provide specific rules to ensure that her financial wishes are carried out without continuous direct input.
Powers of attorney can be either durable or general. Durable POAs remain in force until death unless they are revoked by the principal, cancelled by divorce (if the spouse was the agent), or the agent becomes unavailable. One variation of the Durable POA is the Springing Durable Power of Attorney, which “springs into action” and becomes valid when a specific event or contingency occurs. These events or contingencies must be defined within the body of the document. General powers of attorney are only in effect for a limited time and end if the principal becomes incapacitated.
This document goes into effect when it is signed, and notarized or witnessed according to local laws. In order for the power of attorney to be valid for real estate transactions, it must be recorded with the local agency responsible for maintaining land records. Even if recording is not required for all uses, it’s generally a good idea to record the POA to create an official record of the principal’s original intent.
The fact that a Power of Attorney for Finances is in force does not mean that the principal has given up all control over her financial decisions. For this reason (among many others) it’s essential to use care when selecting an Agent. Often, spouses hold durable POAs for each other. Other times, people select close relatives or friends. Regardless, the Agent should clearly understand and follow the Principal’s wishes. In many situations, the power of attorney is simply a safeguard against unexpected circumstances and the agent is never called to act.
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| June 8, 2012,
Information deemed reliable but not guaranteed, you should always
confirm this information with the proper agency prior to acting.
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